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I have a current 15 year fixed, locked at 3.5% that was recast last year (so about 6 months in at this point). Would like to do some mid-range renovation on bathrooms and such.
I have an option for an open line of credit (amount TBD pending on appraisals and subject to equity of 70%), or I can refi the 1st mortgage at a similar rate, at 30 years, plus cash out to cover the anticipated work++.
The knock on HELOCs would be the adjustable rate, but little closing costs (almost none). The knock on a refi would be paying on the borrowed amount for 30 years (assume little investment income on the amount I don't need right now). I get both cons.
Credit lines are difficult to come by because of open student loans on my credit report - co-signed for child in college, but deferred repayment until late 2018 at least. They assume the present value of the repayment begins now, which is fair enough since I might have to do it when the deferment ends anyway.
HELOCs are good for this purpose and I wouldn't refi if you can afford the payment on that HELOC ontop of the mortgage. HELOCs are more complicated than you are implying, they normally have a draw period and a repayment period. You can get fixed rate repayment periods on most, if not all, HELOCs. Depending on how much and how quickly you can pay it back you may want to look at 0% credit cards, you can get them up to 18 months at 0% these days. If you can't pay it back in the 0% period though it becomes a problem.
HELOCs are good for this purpose and I wouldn't refi if you can afford the payment on that HELOC ontop of the mortgage. HELOCs are more complicated than you are implying, they normally have a draw period and a repayment period. You can get fixed rate repayment periods on most, if not all, HELOCs. Depending on how much and how quickly you can pay it back you may want to look at 0% credit cards, you can get them up to 18 months at 0% these days. If you can't pay it back in the 0% period though it becomes a problem.
I had one before and I closed it (and shouldn't have). The deal was 3.25% on any open balance. That was nice in that I could pay off as much or as little as I wanted each month (assuming a small minimum).
You can also get 2.875% on a 15 year - no points,, but there would be traditional closing costs, but no danger of the heloc bouncing ball.
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